Territory’s transfer payments to be renegotiated: Fentie

Premier Dennis Fentie has struck a deal with Finance Minister Jim Flaherty to renegotiate how much money Ottawa transfers to Yukon coffers.

Fentie, just back from a finance ministers’ conference in Vancouver, agreed with Flaherty and provincial premiers on the need to allow the Yukon, the Northwest Territories and Nunavut to strike a more reasonable payment scheme over transfer payments.

The deal would take place outside the federal negotiations over transfer payments with the provinces.

“We are going to be able to conclude a fiscal arrangement with Canada, hopefully, outside of the equalization process,” Fentie told a news conference Monday morning.

“There’s a much better opportunity for us to deal with the territorial funding formula and conclude (it),” he said.

Flaherty has expressed doubt that a deal between Ottawa and the provinces is reachable in the near future.

The side deal the territories wangled could ensure the Yukon doesn’t have to wait on that process, said Fentie.

The new funding scheme the Yukon and Ottawa are working out is a “needs-based” approach that could see increased federal dollars and more financial incentives for the Yukon’s private sector, said Fentie.

“It’s going to be representative of what our needs are and the gap that is created by our ability to raise revenue, and those needs in terms of delivering comparable programs and services to Yukon citizens,” he said.

The deal should be finalized soon, said Fentie, though he could not give timelines.

A similar funding system existed in the 1980s, but was scrapped in 1995 during widespread cuts by Jean Chretien’s Liberal government.

In response to widening service gaps between the territories and the provinces, Fentie and his northern colleagues walked out on Chretien in 2003.

That snub forced Ottawa to transfer more money to the territories for health care, and helped them win a base-funding agreement that increases by 3.5 per cent every year.

But while the Yukon’s bank accounts have never looked fatter, Fentie is hoping for a better deal.

“The new federal government wants to move away from that, as we do, because it does not make sense in terms of a fiscal relationship that will address the needs of the North, in relation to those comparable standards of service that all Canadians should be receiving,” he said.

To illustrate how important it is for the Yukon to reach a funding deal with Ottawa, Fentie noted about 70 per cent of the territory’s revenues comes from the feds; most provinces see only about 20 per cent of their budgets from Ottawa.

In 2006, the Yukon had about $740 million in total revenues, of which a whopping $620 million came from federal transfers.

In addition to the funding talk, the finance ministers agreed to improved deals between Ottawa and the provinces and territories that could see more money from natural resources stay where they’re extracted, said Fentie.

A “working income-tax benefit” intended to help people move off social assistance was also formalized, and a disability savings plan of tax breaks for parents with disabled children was announced.

During his face-to-face meeting with Flaherty during the two-day conference, Fentie raised the Yukon’s opposition to recent federal cuts that have hurt literacy and women’s programs, as well as cuts to the popular GST-rebate program for foreign tourists.

The Council of the Federation, chaired by Newfoundland Premier Danny Williams, will continue to discuss provincial and territorial issues directly with Prime Minster Stephen Harper, said Fentie.

Fentie is sitting tight before planning any new spending that could become possible with increased money from Ottawa, he said.

“What we won’t do is book anything in terms of revenue until we are fully assured that revenue will be forthcoming,” he said, noting the Yukon’s budget for 2007-2008 is currently under construction

“During that time, we will be working with the federal government to see where the funding formula negotiations go,” he said.

“If all goes well, there could be a booking that reflects the new relationship with Canada.